Correlation Between Webster Financial and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Webster Financial and KeyCorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Webster Financial and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and KeyCorp, you can compare the effects of market volatilities on Webster Financial and KeyCorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Webster Financial with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and KeyCorp.
Diversification Opportunities for Webster Financial and KeyCorp
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Webster and KeyCorp is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Webster Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Webster Financial are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Webster Financial i.e., Webster Financial and KeyCorp go up and down completely randomly.
Pair Corralation between Webster Financial and KeyCorp
Considering the 90-day investment horizon Webster Financial is expected to generate 1.31 times less return on investment than KeyCorp. In addition to that, Webster Financial is 1.1 times more volatile than KeyCorp. It trades about 0.06 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.09 per unit of volatility. If you would invest 1,258 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 690.00 from holding KeyCorp or generate 54.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. KeyCorp
Performance |
| Timeline |
| Webster Financial |
| KeyCorp |
Webster Financial and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and KeyCorp
The main advantage of trading using opposite Webster Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, KeyCorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KeyCorp will offset losses from the drop in KeyCorp's long position.| Webster Financial vs. Affinity Bancshares | Webster Financial vs. Auburn National Bancorporation | Webster Financial vs. First Community | Webster Financial vs. LINKBANCORP |
| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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